Pricing your consulting: You're doing it wrong

http://slash7.com/articles/2009/1/7/pricing-your-consulting-you-re-doing-it-wrong

I think this is worth a discussion. It came up on the AIGA-DC listserv in a conversation about http://99designs.com.

I'm going to quote the last email i got in that chain here to give some general context and john's explanation about why he believes in charging higher rates and having less clients (and his email is where the above link and subject comes from).

I think he has some good points and they may help some business owners here.

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Mira made a lot of great points. While I started in Architecture and
print design with Pica Sheets i taught myself a variety of skills in
order to stay competitive. 3d animation/rendering, HTML/CSS, UI/UX,
Ruby on Rails, etc. Sure. I could have stayed on the drafting board
(still have my 6' 1940s mayline table :D ) but the reality is that you
have to be constantly providing yourself with continuing education, or
you're going to end up without options.

The other thing we did at Meticulous after years of banging our heads
against the wall getting treated like production artists was to run
our rates astronomically high. All of a sudden, the clients that were
headaches sorted themselves out of the equation. We were working less,
making more, and able to focus on quality projects.

My friend Amy Hoy just wrote an article about this on her blog.
http://slash7.com/articles/2009/1/7/pricing-your-consulting-you-re-doing-it-wrong

She refers to what we were doing at first (taking any job trying to
keep the numbers up) as "strip-mining your future". And we were not
getting diamonds. We, at best, were getting coal. And not even good
coal. Almost peat.

We moved from production to consultants. We weren't designers. We were
consultants. It's amazing what people pay when you name it
differently. User experience and user interface (UI/UX) design. Not
"web design". Their nephew does web design. See? Look at this awesome
animated gif! But their nephew doesn't understand usability.

Design *is* usability. Quality interaction design makes or breaks web
properties on a daily basis. But trying to explain that to a business
owner who just wants a store and content management system with
matching print collateral doesn't matter. It's all about figuring out
how to communicate your value to the consumer and getting rid of the
cruft of bad clients.

"But I can't make enough without this horrible client!" you may say.

How many hours does that client drain from you that are not billable?
After a 2 hour phone call with them, can you just move on your merry
way? No. They ruin at least twice as many hours as you can bill them
for. Fire them. Now. Today. Focus on clients that you can form
relationships of mutual respect with. Ask them for referrals to other
people. Demand a premium for your service.

"But I'm just starting out" you may say.

Here's an example. Justin (the other half of Meticulous) decided he
was fed up with programming and wanted to do more photography. He had
some nice art pictures and the like and had shot two weddings for
close friends who gave him cart blanche as far as style goes and he
knocked it out of the park. So he sets up a website
(hankinsphotography.com for those who might think this is a not true
story). He immediately started out by charging more than the other
photographers in Hampton Roads. Why?

* It let him take less clients and spend more time delivering a very
high-quality piece of work
* Less stress trying to juggle too many balls
* Happier clients at the end of the project...
* ... who then referred him to their friends

It's *completely* backwards when you first start thinking about it,
but it works.

Now clients that sit on accounts payable for 120 days? I'm out of luck
on that one. ;)